Autonomy ex-executive guilty of fraud

A former senior executive at the UK software firm Autonomy has been convicted of fraud in the United States.

It is the first judgement in a legal battle that has raged since Hewlett Packard bought the firm in 2011.

Former chief financial officer Sushovan Hussain was found guilty of artificially inflating the firm’s financial position before it was sold.

Mr Hussain’s lawyers say he will appeal against the judgement.

Prosecutors argued that starting in 2009, senior managers at Autonomy, which was one of the UK’s largest software companies, sought to inflate the company’s share price and make the firm more attractive to potential buyers by artificially boosting the number of transactions on its balance sheet.

After HP bought Autonomy for £7.1bn in 2011, the US tech giant said it had uncovered accounting irregularities. A year later, it was forced to write off most of the value of the software firm.

Autonomy’s founder and chief executive, Mike Lynch, a former Cambridge researcher, vehemently rejected HP’s claims that management misled HP over the company’s value. He said HP had concocted the accusations to distract from their own mismanagement and poor performance.

Mr Lynch and Mr Hussain, both British citizens, are also facing a civil case in London, as HP sues them for damages.

Mr Hussain was found guilty on all 16 charges, in what prosecutors claimed amounted to an “unsustainable Ponzi scheme” during the 10 years he managed the firm’s finances.

He faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution, for each charge. Sentencing will take place on Friday.

Revenue ‘manipulated’

Hewlett Packard issued a statement saying it was pleased with the verdict.

“As we have consistently maintained, Mr Hussain engaged in outright fraud and deliberately misled the market about non-existent sales through a series of calculated sham transactions,” it said.

“Autonomy manipulated their revenue, and quarterly results, making an accurate valuation impossible.

“That Mr Hussain attempted to depict the fraud as nothing more than a misunderstanding of international accounting rules was, and still remains, patently ridiculous – and the jury has now held him accountable for his role in defrauding HP.”

Mr Hussain pleaded not guilty in the trial, which took place in San Francisco.

“Mr Hussain defrauded no one and acted at all times with the highest standards of honesty, integrity and competence,” said his lawyer, John Keker.

“It is a shame that the United States Department of Justice lent its support to HP’s campaign to blame others for its own catastrophic failings.”

He said important evidence that backed up Mr Hussain’s defence had been excluded from the trial.

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